October 27, 2021

Volume XI, Number 300

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October 26, 2021

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October 25, 2021

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Federal Government Announces Enforcement Discretion, Deferral For Certain Price Disclosures And Future Rulemakings

Health plans and issuers racing to implement overlapping price transparency and disclosure requirements in response to the Transparency in Coverage final rule (TiC Final Rule) and the Consolidated Appropriations Act, 2021 (CAA) received a welcome reprieve via guidance published August 20. The Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Departments) announced that they would exercise enforcement discretion and defer enforcement of requirements that plans and issuers publish machine-readable files for in-network rates and out-of-network allowed amounts and billed charges until July 1, 2022 instead of January 1, 2022. The Departments also explained that they would reconsider whether the TiC Final Rule’s requirement to publish negotiated rates and historical net prices for covered prescription drugs in a machine-readable file remains appropriate given the subsequent enactment of the provisions in the Division BB, Title II—Transparency of the Consolidated Appropriations Act, 2021, which requires plans and issuers to report similar prescription drug pricing information to the Departments by December 27, 2021.

Temporary Relief, Future Rulemakings and Guidance

The Department’s FAQs About Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 49, August 20, 2021, provides guidance on implementation of both the TiC Final Rule and various requirements under the CAA. The guidance generally falls within two categories: (1) announcements of enforcement discretion for certain requirements; and (2) identification of topics for future rulemakings and guidance.

Enforcement Discretion

The Departments will exercise enforcement discretion to defer:

  • Prescription Drug Pricing Disclosure. TiC Final Rule requirement to disclose a machine-readable file of pricing information for all covered prescription drugs pending future rulemaking;

  • In-network and Out-of-network Price Disclosures. TiC Final Rule requirement to disclose machine-readable files of in-network and out-of-network allowed amounts and billed charges until July 1, 2022;

  • Price Comparison Tool. CAA requirement in No Surprises Act Section 114 to provide a self-service price comparison tool by January 1, 2022, instead opting to align Section 114 with the TiC Final Rule timeline to have such a tool available for plan years beginning on or after January 1, 2023. Additionally, the Departments will focus on compliance assistance;

  • Provider Good Faith Estimates. CAA requirement in No Surprises Act Section 112 that providers and facilities, upon an insured individual’s scheduling of a service, provide a good faith estimate of the expected charges for the scheduled service and any other services reasonably expected to be provided in conjunction with that service. As such, the January 1, 2022 effective date is no longer operative;

  • Advanced Explanation of Benefits. Enforcement of the CAA requirement in No Surprises Act Section 111 that plans and issuers, upon receiving a good faith estimate from a provider or facility, provide an AEOB detailing expected coverage, cost-sharing, and other information; and

  • Pharmacy Benefits and Drug Cost Reporting. Enforcement of CAA Division BB Section 204 regarding plan and issuer reporting of certain pharmacy benefits and drug costs given operational and contractual challenges in meeting the initial December 27, 2021 reporting deadline or second reporting deadline of June 1, 2022. The Departments urge plans and issuers to take steps to report 2020 and 2021 data by December 27, 2022.

The Departments also requested that states adopt a similar approach when they are the primary enforcers of the requirements.

Future Rulemakings and Guidance

The Departments announced future rulemakings and guidance as follows:

  • Prescription Drug Pricing Disclosure. The Departments will consider whether the TiC Final Rule requirement remains appropriate given the similar requirements in Section 204 of Division BB of the CAA;

  • Price Comparison Tool. The Departments will issue additional rulemaking seeking comment about whether compliance with the TiC Final Rule price comparison tool requirements satisfies the similar requirements in the CAA, No Surprises Act Section 114. The Departments also will propose rulemaking that the same information required under the TiC Final Rule also must be provided via telephone upon request, consistent with the CAA;

  • Insurance Identification Card Disclosures. The Departments will provide future rulemaking to plans and issuers about how to comply with the insurance identification card disclosure requirements, particularly about how to address complex coverage designs. Pending that rulemaking, the Departments reiterated that plans and issuers are “expected to implement the ID card requirements using a good faith, reasonable interpretation of the law.” FAQ Q4. The guidance provides additional detail on how the Departments will evaluate the specific data elements are presented.

  • Advanced Explanation of Benefits. The Departments will engage in future rulemaking clarifying these requirements, including infrastructure and data transfer standards given feedback from stakeholders on this and the related good faith estimate requirement.

  • Gag Clause Attestations. Although the Departments do not intend to issue any regulations regarding CAA Division BB Section 201, they will issue guidance about how plans and issuers should submit attestations of compliance. The Departments anticipate collecting attestations beginning in 2022.

  • Provider Directory Requirements. The Departments intend to issue rulemaking on CAA requirement in No Surprises Act Section 116 after January 1, 2022, but plans and issuers “are expected to implement these provisions using a good faith, reasonable interpretation of the statute.” FAQ Q8. Absent further rulemaking, the Departments will not deem a plan or issuer out of compliance as long as it uses a cost-sharing amount no greater than the amount it would impose for participating providers and counts it toward the deductible or out-of-pocket maximum when an enrollee receives services from an out-of-network provider based on erroneous provider directory information.

  • Continuity of Care Requirements. The Departments intend to issue rulemaking on CAA requirement in No Surprises Act Section 113 sometime after January 1, 2022 and such rulemaking will have a prospective application date. Until then, plans and issuers are expected to implement the requirements using a good faith, reasonable interpretation of the statute.

  • Pharmacy Benefits and Drug Cost Reporting. The Departments shall promulgate additional rulemaking or guidance for CAA Division BB Section 204 regarding plan and issuer reporting of certain pharmacy benefits and drug costs.

The Multi-Front Push for Price Transparency, Potential Impacts

Health plans, issuers, hospitals, and providers each are required by federal law or regulation to provide a variety of information about what certain healthcare services cost. For example, under the hospital price transparency rule, hospitals must disclose, inter alia, their standard charges (both gross and payer-specific negotiated charges) for all items and services in a machine-readable file. Likewise, the TiC Final Rule requires health plans and issuers to disclose, inter alia, the in-network negotiated rates (including any derived amounts and underlying fee schedules used to determine cost-sharing) in a machine-readable file as well as the accumulated amounts of the member’s cost-sharing. The CAA, Division BB Title I—No Surprises Act requires providers to furnish a good faith estimate of charges and plans and issuers to send an “Advanced Explanation of Benefits” to members identifying the provider’s network status and estimated costs. And, as explained above, both the TiC Final Rule and the No Surprises Act require plans and issuers to develop a self-service price comparison tool for members.

By 2024, assuming no additional deferrals, consumers and healthcare industry participants will be awash in pricing data for all services. Given the parallel requirements on hospitals and health plans and issuers, the prices reported by a particular hospital and a particular health plan for specific services should be identical in theory. But the reality is that hospitals and health plans and issuers may report different levels of granularity. The Departments may issue additional guidance to further harmonize and clarify how to report pricing data. Likewise, third parties may develop—or enhance existing—applications to distill and display pricing information in a more consumer-friendly way.

The TiC Final Rule explained that it is part of an initiative (including the hospital price transparency rule), “to improve access to the information necessary to empower consumers to make more informed decisions about their health care costs . . . .” But some industry participants speculate that instead of empowering consumers to make more informed decisions about their healthcare spending, the price transparency rules instead will result in confusion, consolidation, and higher prices. It is too early to tell what impacts the price transparency requirements will have on the healthcare system. Indeed, the pricing data could be used as an additional indicator of comparability and compliance with the Mental Health Parity and Addiction Equity Act’s disclosure requirements about how health plans and issuers establish in-network and out-of-network reimbursement rates for medical and surgical care and mental health and substance use disorder benefits. Likewise, some advocacy groups or regulators may use the price transparency data as part of network adequacy analyses.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 236
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About this Author

Xavier Baker Healthcare Attorney Sheppard Mullin Washington, DC
Partner

Xavier Baker is a partner in the Corporate Practice Group in the Washington, D.C. office and member of the firm's Healthcare team.

Areas of Practice

Xavier advises clients on healthcare insurance and managed care regulations, investigations, transactions, and litigation. He counsels national and regional health insurers, pharmacy benefit managers, care coordination organizations, and other specialty healthcare service providers and trade associations on complex state and federal regulatory issues...

202-747-1952
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